422.11G93/1155
The Minister in Ecuador ( Hartman ) to the Acting Secretary of State
[Received January 15, 1921.]
Sir: Referring to Department’s telegrams No. 41 of December 8, 5 p.m., and No. 42 of December 13, 7 p.m.,33 and to my telegram No. 81 of December 16, 4 p.m.,32 I have the honor to inform the Department that I had an interview with President Tamayo yesterday afternoon, which lasted about an hour, during which I fully complied with the instructions contained in Department’s two telegrams above referred to.
[Page 205]In presenting the views of the Department regarding the cacao situation, I referred the President to the memorandum which I left with him in Guayaquil, dated December 6, 1920,34 a copy of which I enclosed with my despatch No. 621 of December 14, 1920,35 and emphasized the importance of his adopting the plan therein outlined. He expressed the opinion that it would be inconvenient to call an extra session of Congress before March or April, as he had some other matters to present to Congress which are not yet prepared, and because the Government is short of funds to pay the expenses of an extra session.
When I called his attention to the failure of his Government to remit the sums to London now on deposit for the service of the Guayaquil & Quito Railway bonds, he said that this failure to make remittances was due to the inability of the Government to buy British exchange at any reasonable price, and that as soon as exchange was obtainable at a fair figure the remittances would be made.
I then expressed the hope that none of the funds now, or hereafter to be, deposited would be withdrawn and used for other purposes. He assured me that none of these funds would be withdrawn or devoted to other uses.
I then called his attention to the endeavors of the Department to assist, in every way possible, Minister Elizalde in his efforts to negotiate with American bankers a solution of the difficult situation, and assured him that his Government “might count upon the assistance of” the Government of the United States “in every way possible and proper, but that in its opinion the situation is rendered more difficult of solution by the failure of the Government of Ecuador to meet its obligations.”
To this he replied that he appreciated the friendly attitude of the Department, and that it might assist his Government by assisting the banks of Ecuador to obtain loans to the extent of five to seven million dollars on the security of real estate mortgages. I agreed to transmit that suggestion to the Department.
I called the President’s attention to the reported interview with him published in the London Times, wherein he was quoted as favoring foreclosure of the Guayaquil & Quito Railway. He immediately confirmed the interview. He said that he gave it as his opinion as a lawyer that under the terms of the mortgage contract, foreclosure was the proper course to take, as the Government of Ecuador was only a guarantor, and that by foreclosure the primary burden would fall upon the Railway Company. I suggested [Page 206] to him, in reply, that it a foreclosure was made, and the property sold, as it doubtless would be, at a price far below the bonded indebtedness, there would be a large deficiency judgment to be taken care of. He agreed to that, but said that the purchasers of the Railway would take the same without changing the rights and obligations of the Government as stipulated in the contracts.
I pointed out that the views expressed in his said interview would not enhance the credit of Ecuador nor favorably impress the American bankers who have a proposed refunding loan under consideration. He stated that Ecuador would probably not ask for a refunding loan under these circumstances.
In short, he did not exhibit any interest in the proposed refunding loan.
In further compliance with Department’s said instruction, I have today addressed a note35 to the Minister for Foreign Affairs, expressing Department’s regret at the President’s attitude toward this legitimate American enterprise, the affairs of which are being carried on in accordance with the provisions of an award made by representatives of the Government of the United States and of the Government of Ecuador.
I have [etc.]